New-Home Sales up in April Following Downward Revision in March

Sales of newly built, single-family homes rose 3.3 percent in April to a seasonally adjusted annual rate of 526,000 units, the U.S. Commerce Department reported. However, this gain reflected downward revisions to sales numbers reported for each of the previous three months, including a particularly large revision for March.

Sales rose in three out of four regions in April. The Northeast posted a 41.7 percent gain that erased an equivalent decline in the previous month, but the Midwest and West recorded gains of only 5.8 percent and 8.3 percent, respectively. The South, which is the nation’s largest housing market, posted a 2.4 percent decline.

“We still need a great deal of help from the administration and Capitol Hill to halt the downward trends in home sales and house prices that are producing such a drag on our nation’s economy and disrupting financial markets,” said Sandy Dunn, president of the National Association of Home Builders (NAHB) and a home builder from Point Pleasant, W. Va.

According to NAHB Chief Economist David Seiders, sales were down 42 percent on a year-over-year basis, the largest such reversal since September 1981. The NAHB’s latest builder surveys show home buying has not yet stabilized, and the association anticipates some further erosion over the coming months.

April’s preliminary sales pace of 526,000 units was equivalent to the previously reported sales pace for March. However, Commerce in April revised March’s reading substantially downward to 509,000 units, which is 11 percent below the revised February reading.

The inventory of new homes for sale declined 2.4 percent in April to 456,000 units, which is a 10.6-month supply at the current sales pace. Completed homes accounted for 40 percent of total new homes for sale, up from 33 percent a year earlier, and the median number of months for sale since completion rose to 8.0, which is the highest since mid-1991.

“The fact that new-home sales are up slightly from a dismal beginning to the spring home buying season in March isn’t much to celebrate,” Dunn said, implying the market still has much ground to make up.